Posted by Mallory Megan | Posted in credit | Posted on 06-09-2010
Exactly who is trying to get me to pay up? The Fair Debt Collection Practices Act was created in the 1970s and provided a good amount of protections for consumers. There are strict rules and regulations that a debt collector must abide by, and if any of these regulations are violated, there’s a good chance that you could sue that agency. But what about that friend of yours who owes you five dollars? Do you have to grant them thirty days to refute the claim? Clearly, you do not.
The point is that the Fair Debt Collection Practices Act applies to debt collectors, and only debt collectors. Take a look at Morency v. Evanston Northwestern Healthcare Corp, a district court case in Illinois from 1999. Attempting to collect money, a hospital issued and mailed out pre-collection notices, which is a no-no for third party collectors. However, the court ruled that the hospital was merely a creditor, not a collection agency, so the FDCPA did not apply to it.
Courts take a lot of factors into consideration to determine whether the creditor should be considered the actual third party collections agent. A collection agency’s participation in the actual debt collection would have to be miniscule. Is the collection agency only mailing service? Do the letters say if the debtor doesn’t pay the debt will be referred for collection? Is the collection agency paid only for sending letters, rather than commission?
If the collection agency does not receive any payments or forward any payments to the creditor, that is suspicious. If a debtor doesn’t make a response to the letter and the collection company has no further contact with the debtor, or if it doesn’t obtain the files of the debtors, they probably are going to be considered bill collection agencies.
The lesson you should walk away with is that it is crucial that you know who you are paying your debt to. It’s always wise to be on the ball when it comes to your money.
Mallory McGuinness works for a debt collection company. Also she composes stories on business, finance, consumer spending and collection agencies.
My mom and step dad have been married for ten years. My step-dad never closed out his credit cards with his ex-wife, and now she has maxed them out and refuses to pay for them. My mom is having to pay for them, but is there anything she can do about it?
Thanks
Deb